Kloeckner Cuts Profit Forecast on Slumping European Steel Demand

By Tino Andresen -
Aug 7, 2013

Kloeckner & Co. (KCO), a German steel
trader part-owned by the Knauf family, lowered its 2013 profit
forecast by 30 percent because of slumping European demand.

The Duisburg, Germany-based company expects earnings before
interest, taxes, depreciation and amortization, or Ebitda, and
restructuring expenses to fall to 140 million euros ($186
million) from 200 million euros forecast previously, it said
today in a statement.

“Even if we cannot expect any tailwind from the European
steel market, we anticipate that, given the timely, radical
restructuring measures, we will regain profitability under our
own power next year,” Chief Executive Officer Gisbert Ruehl
said in the statement. “Additional impetus can come from the
generally expected recovery in the U.S., our growth market, and
from the currently improving price environment.”

Dwindling demand for steel used in autos and construction
in Europe and competition from China have squeezed producers’
profit margins as they grapple with surplus capacity. Germany’s
second-largest steelmaker Salzgitter AG (SZG) lowered its profit
forecast for the third time in nine months this week.

Interfer Holding GmbH, which owns Kloeckner’s rival Knauf
Interfer SE, said in February it bought a 7.82 percent stake in
Kloeckner. The unit of the holding company, owned by Dortmund-based entrepreneur Albrecht Knauf, 70, plans to expand and said
the deal was a “strategic investment.”